Good afternoon, everyone. Welcome to Huhtamäki's Annual Sustainability Results Call. My name is Kristian Tammela, VP of Investor Relations. With me, I have Rahul Nene, our Head of Sustainability Center of Expertise. He will first present today our sustainability performance in 2025 and then talk, and present more in detail the strategy and next steps for us. After that, we have time for Q&A. With that, I'm handing over to Rahul.
Thank you, Kristian, and hello to everyone who is dialing in. As shared by Kristian, I'm Rahul, and I head the Center of Expertise for Sustainability at a group level for Huhtamäki. I would like to begin today's call by going through a few highlights on our 2025 sustainability performance.
As you can see across various pillars of sustainability, we have seen good progress happening, and I would like to first emphasize on something that I'm personally excited by, which is our updated climate targets. In 2025, we updated our climate targets on Scope 1 and 2 short-term to be aligned with the 1.5-degree trajectory on Scope 1 and 2. What this means is that we are becoming more ambitious on our GHG reduction targets in absolute terms.
While we did this on Scope 1 and 2, we also updated our targets on Scope 3, and I'll talk about this a bit more as we go through the presentation. This is more in terms of the targets. The actual performance, we increased also our renewable electricity to 60.6% at a group level, which also impacted a reduction in terms of our Scope 1 and 2 emissions by 4.5%.
Again, something that I will deep dive a bit later on. Moving to other topics and KPIs under environment, something that we are proud of, which is the waste management that we have. About 84.6% of our non-hazardous waste went to recycling. That's again an improvement over our 2024 numbers, and that also helped us reduce our waste to landfill.
Earlier it was 5.5%, and we have reduced it to 4.7% in 2025. Moving to our social pillar, we have a strong performance on safety with 4% reduction in our total recordable injuries, and we also have a higher employee engagement participation. Again, an uptick from our 2024 performance. Moving to product sustainability, we increased the percentage of raw materials that were either renewable or recycled to 67.9%. This helps in moving our products to a more sustainable structure, but also helps reduce our Scope 3 emissions. It is also one of our decarbonization levers on Scope 3, and I will also talk about it briefly a bit later.
Talking about the G of ESG, that is the governance, this is something that we really focus on and is one of our value systems in the company. Taking one indicator, which is our code of conduct for our employees. 98.5% of our employees completed the new updated code of conduct training, which again, was an improvement over the 2024 performance.
This is more or less a high-level highlight on our performance across ES and G. What I'll do is now I'll do a bit of deep dive on each of the topics. Starting with climate and environment. As shared earlier, while we updated our climate targets, we also continued on our progress on our GHG reductions, focusing mainly on Scope 1 and 2.
As you can see, Scope 1 + 2 as compared to 2024, we reduced by about 4.5%. That continues our progress on absolute GHG reductions independent of the production growth. In terms of renewable electricity, which is one of our key levers for decarbonization, we improved our performance from a 59.1% to a 60.6% in 2025.
That of course, you can see reflected in the Scope 2 reductions. In terms of waste, from 81.6% to we moved to a 84.6% of non-hazardous waste being sent for recycling. All of these actually also help our Scope 3 reductions, which helps finally on our targets that we have now taken on Scope 3. Again, I'll discuss on the next slide.
From a percentage of fiber that is dependent on forestry, which is the virgin fiber, or then the fiber that we used, which is recycled waste, about 98.8% of our fiber used was either certified or recycled. There's a slight change as compared to 2024, but that's more coming from the product mix. Going a bit more in depth on our climate targets, as I was speaking earlier. Earlier we had climate targets that were aligned with the well-below two-degree trajectory, so they were slightly less ambitious. If you can see our performance till 2024, we had been doing really well. Now we have updated our climate targets to 1.5 degree trajectory aligned for Scope 1 and 2 for the short term.
At the same time, we have committed to setting a net zero target for 2050, and we'll be setting this target by October 2027. On Scope 3, we have committed to reducing absolute Scope 3 emission by 25% by the year 2030. For both Scope 1, 2, and Scope 3, we have a new baseline, which is a 2022 baseline. The good news about this is these targets were validated by the Science Based Targets initiative at the end of December. Now, while this validation definitely seems like just a tick mark, actually, those who are aware of it, this process is quite cumbersome and quite in-depth. We know companies that are stuck in the validation process for months and months together.
We were able to quite sail through the validation process, and that's actually a testimony to the robustness of our data management around emissions and the decarbonization levers that we have. That's good news that's coming from us. And then we are looking forward now to engaging with our suppliers to reduce our Scope 3, and then of course, working on our own operations to reduce our Scope 1 and 2 emissions further. To just give a flavor on the kind of projects and initiatives that we are taking to reduce our Scope 1 and 2 in line with business realities, I would just like to highlight one project which is coming out of India.
In India, we are investing in a solar farm through a model which is called as a group captive model, where we, along with a developer, form a legal entity, which is a special purpose vehicle, and we invest in a solar farm that's around about 100 km from our existing plant in Khopoli. This plant generates solar energy to the tune of 50% of the total electricity requirements of Khopoli plant, and it replaces it by solar energy. While it replaces it with renewable energy, because we have invested in this kind of a model, it also gives us certain leeway on the grid electricity charges so that the investment actually has a return of less than one year.
As you can see from the slide, the total investment amounts to about EUR 320,000, but whereas the annualized savings are about EUR 600,000. This is something that we want to highlight, that these are the kind of initiatives that now we are looking out, where we can reduce our GHG impact. We can transition to renewable energy, but also support the business. For example, the total benefit out of such a project is that we will reduce our annual emissions by about 9,000 tons, which is about 2% Scope 1 + 2 emissions of the entire group. In one action, we are reducing this impact with a return on investment that's less than one year. Moving to other topics, which is people and product. Starting with people and health and safety.
We have a lost time injury rate on a 12-month rolling basis at 1.23. This performance is more or less in line with what we had in 2024. If you look at the total recordable injury rate, we achieved 2.57, which was a reduction against our target, which was of 2.66. Moving to product. As I shared earlier, we improved the percentage of renewable and recycled materials as part of our total raw materials. We moved from 66% - 67.9%. As shared earlier, this helps us reduce our Scope 3 emissions as well. Specifically talking of product sustainability, and as you would know, our company's North Star is to be the first choice of sustainable packaging solutions.
We have a wide array of sustainable products that are available to our customers. Here on this slide, I just want to present a few of such examples which we present to our customers as potential sustainable solutions. As a company, we have options across various materials. We say that we don't really focus on one material, but, we choose a material that is sustainable as per data and as per infrastructure and regulations in a particular region.
You can see across our Flexible, Foodservice, North America, and Fiber Packaging segments, we have a wide array of potential solutions that could be presented to the customers. Starting with our blueloop solutions, with high barriers on PE as well as paper-based flexibles to our egg cartons and fiber-based packaging, to our Chinet packaging in North America, to our Foodservice Packaging.
An example is ProDairy. This is what we bring to the table, where we deliver functionality, sustainability, as well as financial, commercial, benefits to our customers. Specifically talking of 2025, I would like to highlight a few examples where we have been successful in delivering on the customer's requirements when it comes to sustainable packaging solutions. An example is ProDairy product range. This is more for our yogurt and dairy applications.
This kind of application is quite tricky because it requires stiffness in terms of being able to stand on the shelves and having a good fit with the lid. It needs to have good moisture barrier, especially in chilled conditions, because they are stored in, say, refrigerated environments. That generally pushes the plastic content of such solutions to more than 10%.
To comply with the regulatory requirements in E.U., we have been able to develop a product range targeted on this application with less than 10% plastic content. It's 100% recyclable, but still delivers on functionality. Moving to flexibles. We have had some success cases with our recyclable flexible packaging solutions, made out of polyolefins. Typical applications where we have been successful are hair color, pet food, and soup packaging. And that helps us meet our customers' ambitions of transitioning to recyclable packaging solutions. Fiber Packaging, which 100% uses recycled paper as a raw material, that's a business segment that we have grown, and that actually pushes our actual supplies to our customers on sustainable solutions quite up.
These solutions are recyclable or home compostable, take away literally newspaper waste away from what could be a landfill or composting, and then make usable packaging out of it. Applications such as eggs, fruits and berries, these are typical applications that we find use of with these solutions, but that also helps us deliver a strong performance on our sustainable packaging solutions. All in all, putting this all performance together, we are widely recognized by the most popular ESG disclosure agencies across CDP, EcoVadis, MSCI, Sustainalytics are examples where we disclose voluntarily and you can see the performance. I will not read through everything, but quickly going through it on CDP, on climate, forest and water, we are rated at B throughout. EcoVadis, we are rated gold for the fifth year in a row now.
If you can see, even within being rated as gold, we have moved from a score of 75 to 79, so we have progressed. MSCI, we continue to be rated at A, and under Sustainalytics we continue to be rated as a low-risk company. This was a gist of our overall performance on sustainability, some of the key KPIs that we have progressed and how this is getting perceived even by the disclosure agencies. Next, I would just like to speak a bit on our sustainability ambition, how we are planning to implement sustainability, in the years to come, and then across the business segments. However, before I go into the exact sustainability ambition and go into typical KPIs and sustainability-related indicators, I would like to start with the overall profitable growth strategy of the company.
As said earlier, our 2030 ambition is to be the first choice of sustainable packaging solutions. How we deploy this is through our value drivers, which is profitable growth, disciplined capital allocation, and accountability and speed of execution. Now, it is in these growth levers that we work with sustainability. The way we look at sustainability is sustainability needs to support all of these growth value drivers, which ultimately supports the growth of the company. Now, starting with profitable growth, of course, our entire sustainability performance across climate, deforestation-free supply chain, product sustainability and social sustainability helps us deliver on our customers' requests and expectations on sustainability. That ultimately helps us support our profitable growth with them.
From a perspective of disciplined capital allocation, an example like I shared of the COPOLY project, these are the kind of projects that we are trying to implement, so that we have a disciplined financial allocation in terms of our resources. We get the maximum return on them but also are able to progress on our sustainability ambitions. Coming to the accountability and speed of execution, this is something that we have spent time clarifying in terms of our internal ways of operating on sustainability.
It is absolutely the business segments that are accountable to drive sustainability, prioritize based on the impacts that they have. This is absolutely critical for success on delivering sustainability because sustainability no longer is seen as something that is external to the business but has to be integrated well into the business planning.
That's why we are excited by ensuring that the accountability lies in the businesses. With this background, I would just like to recap how our ambition is placed at a group level. As shared earlier, focusing on climate, our 2030 targets are now aligned with the 1.5-degree trajectory on Scope 1 and 2. Then we also have Scope 3 targets of 25% reduction by 2030 and a commitment to set net zero targets for 2050. From an environment perspective, critical topics that we focus on are deforestation-free supply chain, waste reduction, waste disposal, and the use of water, specifically in certain technologies that we have. Talking of social responsibility, we want to act as a responsible employer, and we continue to strengthen our processes to manage human rights across the value chain.
From a product sustainability, this speaks directly to our North Star, to develop solutions that are circular. Overall, in terms of the way we do the governance and processes, it's a framework that is based in our value system, and our ethics and compliance, to ensure that we mitigate any risks, and we don't have any negative impacts. Now, while this looks at a, at an overall group picture. If you go into a bit more detail, especially in each of the business segments that we have, one can imagine that the production technologies that we have in each of the segments are very different from one another. A very quick example for you to understand this is, for example, in our Fiber Packaging, we use 100% recycled paper. We use water in our production.
Whereas if you look at flexible packaging, there is absolutely no water usage in our operations. Having a common objective, a common target across technologies does not make sense for us. We spent time in 2025 to really prioritize and focus the topics that are most important for each of our business segment. These priorities have been now built up to form what we are seeing as a sustainability ambition for the entire group. This is what I would like to discuss in the next slides. As you can see, these are some of our priorities at a group level, starting with climate, deforestation-free supply chain, traceability on fiber, human rights, zero accidents. You can see a few words which are saying as minimizing and maximizing.
The reason they are there in this manner is because these are the topics which have differing impacts basis the technology that we have. I'll discuss this in a couple of slides. What we have tried to do is we have tried to separate our sustainability ambition into three parts which we call as core, common, and distinct. We see that there are certain topics like climate, where all of our production technologies, all our business segments have an impact, and we need to have a group approach and a group target on those topics. Whereas there are other certain topics like water consumption, where only a specific set of technologies and specific business segments have an impact, and we want to focus our actions on those topics only in those segments.
We don't have overarching targets on these KPIs for all business segments, but on certain topics that are very relevant to a particular business segment, then we have only a segment relevant KPI and a target setting. What this helps us to really do is focus and prioritize our financial human resources on actions that are most relevant to that technology, rather than having a common top-down approach on sustainability.
This is what I'm trying to emphasize. While looking at the group picture, if you refer to the couple of slides earlier where I spoke about climate, environment, product, you would not see much of a difference because at a group level we are still focusing on all those topics. The way we are implementing is very much closer to the business.
The priorities that you see over here are agreed now bottom-up, starting from a factory level to a business segment, and from the segment to a group. The target setting has been done in terms of what is relevant to that particular technology, and not necessarily having a common group target across all technologies. I think I have emphasized this earlier, but again speaking, the accountability to deliver on these KPIs, on these targets is very much close to the operations with a central team that is acting as a center of expertise, to guide the segments on technical topics and overall direction to take. With this background, I just wanted to share how this ambition is now distributed across segments. I will go through environmental, social, and governance topics.
As you can see, some of the topics have been marked as core, and as shared earlier, these are the topics where we see that there is impact and relevance to all technologies, all segments within the group. Whereas some of the other topics have been nominated as common or distinct, and these are the topics where we see that only specific segments have an impact or have a potential to improve. I'll just go through what they mean for us. On the environmental side, product sustainability and climate are topics which we see as relevant across our group and those hence they are core, and they will have group targets, and they will have a group approach, which is relevant and applicable to all segments.
On the social, health and safety, being a responsible employer, and human rights are topics that we see have relevance across our segments. From a governance, conducting business responsibly and then managing impacts and risks in the value chain and in our operations from a way of business, a way of doing business perspective, is something that we see relevant across our technologies. However, if I go into specific segments and technologies, all the places where we use raw materials, which are dependent on forest, which is basically virgin fiber, that is where we have a strong focus on deforestation-free and conversion-free supply chain. So into brackets, you can see certain names of our segments.
Our Fiber Packaging, our Foodservice Packaging in North America, these are the segments that use virgin fiber or recycled fiber and need to have a focus on this work stream. Whereas waste generation and disposal, we see that our major challenge is coming from Fiber Packaging and certain factories in North America. We have our focus on waste generation and disposal in these places. Whereas we are focusing on water consumption in our Fiber Packaging plants which is the only technology in our group which uses water for production. That's where we are really focusing our efforts in terms of reducing our water consumption.
Just to clarify, this does not mean that these are topics that are not at all relevant for other technologies or businesses, but this is where our attention in terms of improving our progress or progressing or improving our footprint is. While other segments, they continue to monitor and report on these KPIs, and all of these numbers are still taken together at a group level for reporting. Last but not the least, there are certain priorities that have been considered as absolutely segment priorities relevant to a specific technology which we have called out as distinct. As an example, you can see the solvent used in flexible packaging. This is something that we use only in flexibles and has a relevance over there.
While the group may not have a target on solvent use, flexible packaging as a segment is highly focused on reducing our virgin solvent consumption and recovering our solvents. All in all, this is how we have set up our sustainability ambition, and we hope that with this prioritization, clear accountabilities, and focused resources, we are able to progress further on all our KPIs and indicators. With this, I stop my presentation, and now I open up for any question and answers that we may.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers.
All right. There seems to be no questions today. Again, reminding you, if you have any follow-up questions, you can always reach out to the IR team. With that, we'd like to thank you for your attention and wish you a great day. Thank you.